LAWRENCE S. ROBBINS (LR-8917) ROBBINS, RUSSELL, ENGLERT, ORSECK, UNTEREINER & SAUBER LLP 1801 K St., NW, Suite 411 Washington, D.C. 20006 Telephone: (202) 775-4500 Facsimile: (202) 775-4510 lrobbins@robbinsrussell.com Attorney for defendant Bradley J. Stinn UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ---------------------------------------------------x UNITED STATES OF AMERICA DEFENDANT BRADLEY J.

STINNS MOTION FOR RELEASE - against - PENDING APPEAL

BRADLEY STINN, 07-CR-113 (NG)

Defendant. ----------------------------------------------------x

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TABLE OF CONTENTS

TABLE OF AUTHORITIES .......................................................................................................... ii ARGUMENT.................................................................................................................................. 1

I.

................................................................................................................................ 3

Premising Criminal Liability On Whether Friedmans Generally Charged-Off Accounts At 120 Days Or Followed Strict Credit Application Guidelines Violated Due Process

A.

...................................................................................................................... 4 The Governments Charge-Off Theory Rested On A Hopelessly Ambiguous Benchmark

B. ............ 7

The Governments Theory That Friedmans Failed To Follow Strict Credit Application Policies Likewise Rested On An Intractably Ambiguous Premise

II. .............................. 9 The Jury Instruction On Conscious Avoidance Was Reversible Error

A. ........................................................ 11 The Conscious Avoidance Instruction Was ErrorB. ........................................ 13 The Error Was Not Harmless Beyond A Reasonable Doubt

III. .......... 16 The Courts Rulings During Jury Deliberations Were Erroneous And Prejudicial

A. ...................................................................... 18 The Allen Charge Was Unduly CoerciveB. ........................................................... 22 Dismissal Of The Holdout Juror Was ImproperC. ...................................................... 25 Substitution Of The Alternate Juror Was Improper

CERTIFICATE OF SERVICE

ii

TABLE OF AUTHORITIES

Cases Burton v. United States, 196 U.S. 283 (1905) .............................................................................. 19

District Council 37 v. New York City Dept. of Parks and Recreation, No. 93 Civ. 2580 (AGS), 1995 WL 739512 (S.D.N.Y. Dec. 14, 1995) ............................................................................ 25

Griffin v. United States, 502 U.S. 46 (1991) .................................................................................. 4

Grossheim v. Freightliner Corp., 974 F.2d 745 (6th Cir. 1992) .................................................. 21

Jiminez v. Myers, 40 F.3d 976 (9th Cir. 1993) ............................................................................. 19

McNeill v. Polk, 476 F.3d 206 (4th Cir. 2007) ............................................................................. 25

Perez v. Marshall, 119 F.3d 1422 (9th Cir. 1997).................................................................. 21, 26

Sher v. Stoughton, 666 F.2d 791 (2d Cir. 1981) ........................................................................... 24

State v. Squiers, 896 A.2d 80 (Vt. 2006) ...................................................................................... 24

TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438 (1976) ............................................................... 8

United States v. Adeniji, 31 F.3d 58 (2d Cir. 1994) ..................................................................... 13

United States v. Ajiboye, 961 F.2d 892 (9th Cir. 1992).......................................................... 20, 21

United States v. Baker, 262 F.3d 124 (2d Cir. 2004) ................................................................... 23

United States v. Barnhart, 979 F.2d 647(8th Cir. 1992) ........................................................ 13, 14

United States v. Bradshaw, 281 F.3d 278 (1st Cir. 2002) ............................................................ 24

United States v. Crispo, 306 F.3d 71 (2d Cir. 2002) ........................................................ 19, 20, 21

United States v. Ferrarini, 219 F.3d 145 (2d Cir. 2000)........................................................ 11, 13

United States v. Fields, 592 F.2d 638 (2d Cir. 1978) ..................................................................... 7

United States v. Giancola, 754 F.2d 898 (11th Cir. 1985) ............................................................. 2

United States v. Ginyard, 444 F.3d 648 (D.C. Cir. 2006) ............................................................ 24

United States v. Handy, 753 F.2d 1487 (9th Cir. 1985) ................................................................. 2

United States v. Hart, 906 F. Supp. 102 (N.D.N.Y. 1995)............................................................. 2

United States v. Hasting, 461 U.S. 499 (1983)............................................................................. 13

United States v. Hernandez, 862 F.2d 17 (2d Cir. 1988) ............................................................. 22

United States v. Hynes, 424 F.2d 754 (2d Cir. 1970) ................................................................... 19

United States v. Joseph, 542 F.3d 13 (2d Cir. 2008)...................................................................... 4

United States v. Lamb, 529 F.2d 1153 (9th Cir. 1975)........................................................... 25, 26

United States v. Lara-Ramirez, 519 F.3d 76 (1st Cir. 2008)........................................................ 24

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United States v. Lara-Velazquez, 919 F.2d 946 (5th Cir. 1990)................................................... 11

United States v. Love, 597 F.2d 81 (6th Cir. 1979) ...................................................................... 21

United States v. Matthews, 787 F.2d 38 (2d Cir. 1986) ................................................................. 3

United States v. Meyers, 410 F.2d 693 (2d Cir. 1969) ................................................................. 20

United States v. Miller, 753 F.2d 19 (3d Cir. 1985) ....................................................................... 2

United States v. Quiroz-Cortez, 960 F.2d 418 (5th Cir. 1992)..................................................... 26

United States v. Randell, 761 F.2d 122 (1985)............................................................................... 2

United States v. Razmilovic, 507 F.3d 130 (2d Cir. 2007) ........................................................... 25

United States v. Robinson, 560 F.2d 507 (2d Cir. 1977).................................................. 19, 20, 21

United States v. Rodriguez, 983 F.2d 455 (2d Cir. 1993)....................................................... 11, 13

United States v. Sae-Chua, 725 F.2d 530 (9th Cir. 1984) ............................................................ 20

United States v. Samet, 207 F. Supp. 2d 269 (S.D.N.Y. 2002) .................................................... 22

United States v. Svoboda, 347 F.3d 471 (2d Cir. 2003) ............................................................... 11

United States v. Thomas, 116 F.3d 606 (2d Cir. 1997) .......................................................... 22, 23

United States v. Washington, 434 U.S. 497 (1978) ...................................................................... 26

United States v. Williams, 547 F.3d 1187 (9th Cir. 2008)...................................................... 19, 20

Yates v. United States, 354 U.S. 298 (1957)................................................................................... 4

Statutes 18 U.S.C. 3143(b)(1) ............................................................................................................. 1, 27

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DEFENDANT BRADLEY J. STINNS MOTION FOR RELEASE PENDING APPEAL

Defendant Bradley Stinn, by the undersigned counsel, respectfully moves for release on

conditions pending appeal pursuant to 18 U.S.C. 3143(b)(1). Release pending appeal shall be

granted where: (1) the defendant establishes by clear and convincing evidence that he is not likely to

flee or pose a danger to any other person or to the community; (2) the appeal is not for purposes of

delay; (3) the appeal will raise[] a substantial question of law or fact; and (4) that question, if

resolved in defendants favor, is likely to result in a reversal of the conviction. 18 U.S.C.

3143(b)(1). All of those requirements are satisfied here.

First, it is beyond serious dispute that conditions short of incarceration are sufficient to

ensure that Stinn will not flee. Stinn has been on release since his initial arraignment, and he has

consistently complied with every condition and made every appearance required of him. Nothing

has changed since his convictionindeed, Stinn continues faithfully to comply with the conditions

of his release notwithstanding the governments recent assertion that his Guidelines range is

upwards of 70 years and its demand for a substantial term of incarceration.

Perhaps most important, as Stinns sentencing memorandum explains in detail, he is

committed to his family and has significant and powerful ties to his community. Stinn is married

with three minor children who are dependent on him financially and emotionally. He is quite active

in his community and in his church. There is simply no credible basis to suggest that he would pose

a risk of flight.

Moreover, Stinns appeal is not for the purposes of delay, and it will raise questions that are

plainly substantial. As the Second Circuit has explained, a substantial question is one of more

substance than would be necessary to a finding that it was not frivolous. It is a close question or

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one that very well could be decided the other way. United States v. Randell, 761 F.2d 122, 125

(1985) (quoting United States v. Giancola, 754 F.2d 898, 901 (11th Cir. 1985)). Put differently, the

issue need only be fairly debatable among reasonable jurists. Randell, 761 F.2d at 125 (quoting

United States v. Handy, 753 F.2d 1487, 1490 (9th Cir. 1985)); see also United States v. Hart, 906

F. Supp. 102, 105 (N.D.N.Y. 1995) (noting that Randell cited Harts fairly debatable standard

approvingly). Once the Court determines that there is a substantial question for appeal, it must

then consider whether that question is so integral to the merits of the conviction on which defendant

is to be imprisoned that a contrary appellate holding is likely to require reversal of the conviction or

a new trial. Randell, 761 F.2d at 125 (quoting United States v. Miller, 753 F.2d 19, 23 (3d Cir.

1985)).

Stinn will raise at least three substantial questions on appeal, any one of which would, if

resolved in his favor, require a new trial on all counts. As explained in detail below:

Stinn will appeal the question whether the government should have been permitted to base criminal securities fraud liability on statements that Friedmans generally charged-off delinquent accounts after 120 days and that it followed strict credit application guidelines. Due process requires that a defendant receive fair notice that charged conduct is forbidden, but these vague standards cannot bear such weight.

Stinn will appeal the Courts decision to give a conscious avoidance instruction to the jury.

The government failed to establish the factual predicate for that instruction, because there was no evidence that Stinn deliberately avoided learning a critical fact. Rather, the governments evidence was aimed solely at establishing that Stinn had actual knowledge of fraud. The instruction was prejudicial because the governments actual-knowledge theory rested almost exclusively on the credibility of Victor Suglia. But Suglia (and his confederate, John Mauro) concededly perpetrated an unrelated fraud entirely without Stinns knowledge and acknowledged fraudulently manipulating Friedmans accounting outside the scope of the conspiracy alleged here.

Stinn will appeal the Courts rulings during jury deliberations. The Court made three

independentyet compoundederrors during deliberations, beginning with its delivery of an Allen charge after learning the identity of the holdout juror for acquittal. Dismissal of that

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juror and the subsequent substitution of the alternate juror (rather than declaring a mistrial) were likewise improper and prejudicial.

I. Premising Criminal Liability On Whether Friedmans Generally Charged-Off

Accounts At 120 Days Or Followed Strict Credit Application Guidelines Violated Due Process

The cornerstone of the governments case was that Stinn made two separate

misrepresentations regarding Friedmans financial statements. First, the government alleged that

Friedmans promised generally to charge-off accounts when they became 120 days delinquent, but

that the company did not in fact do so. Second, the government alleged that Friedmans pledged to

follow strict credit application policies, but that the companys policies were in fact not strict. If

either theory of prosecution is legally problematicand, as we explain below, both are fatally

flawedthe general verdicts returned here must be overturned.

Both alleged misrepresentations were premised on language that is insolubly ambiguous and

therefore utterly incapable of providing the fair notice that the Due Process Clause requires. See

United States v. Matthews, 787 F.2d 38, 49 (2d Cir. 1986) (criminal liability cannot attach where a

person of ordinary intelligence has not received fair notice that his contemplated conduct is

forbidden). How would a reasonable person in Stinns shoes determine whether Friedmans was, in

fact, generally charging-off accounts at 120 days? Likewise, how would someone in Stinns

position ascertain whether the credit-granting policies at Friedmansa 700-store chain that

expressly marketed itself to low- and middle-income customerswere strict? More to the point,

how could a reasonable business person fairly predict how 12 jurors would (years later) interpret

such amorphous terms? Framed in that way, the governments two theories invited conviction for

almost any deviation from some free-floating benchmark. Such indeterminacy in the imposition of

criminal liability is precisely what due process principles prohibit.

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Moreover, these legally invalid theories fatally infected the general verdicts returned against

Stinn. The indictment did not allege specific misrepresentations as separate counts. Rather, the

government elected to charge just three countsconspiracy, securities fraud, and mail fraudand

then invited the jury to consider any and all charged misrepresentations in support of these offenses.

A verdict must be set aside where it is supportable on one ground, but not on another, and it is

impossible to tell which ground the jury selected. United States v. Joseph, 542 F.3d 13, 19 n.5

(2d Cir. 2008) (quoting Griffin v. United States, 502 U.S. 46, 52 (1991) (in turn quoting Yates v.

United States, 354 U.S. 298, 312 (1957))). The government expressly invoked Friedmans charge-

off and credit policies in support of all three counts; accordingly, if the court of appeals finds either

of these misrepresentations to be legally invalid, it will likely invalidate all three general verdicts

and remand for a new trial.

A. The Governments Charge-Off Theory Rested On A Hopelessly Ambiguous Benchmark

The government claimed that Stinn deliberately misled investors regarding Friedmans

practice of charging-off delinquent accounts receivable. More particularly, the government argued

that the following statement in Friedmans public financial statements was fraudulent:

Our policy is generally to write-off in full any credit accounts receivable if no payments have been received for 120 days and any other credit accounts receivable, regardless of payment history, if judged uncollectible (for example, in the event of fraud in the credit application or bankruptcy). We maintain an allowance for un-collectible accounts based, in part, on historical experience.

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audulent.

Ex. 16 at 5 (emphasis added).1 The government then argued that Friedmans failure automatically

to charge-off accounts immediately upon becoming 120 days delinquent rendered the quoted

disclosure fr

The governments theory rested upon the unstatedbut legally flawedpremise that a

reasonable person in Stinns position had fair notice that Friedmans charge-off practices could not

fairly be characterized as generally charging-off accounts at 120 days. That is because the term

generally is insolubly ambiguous and therefore provides an insufficient basis upon which to

predict whether the practices at issue here would be deemed materially inconsistent with it. First,

the actual statement at issue cannot mean what the governments theory presupposes. Under any

possible interpretation, generally means (at least in part) not always. As used here, the term is

plainly intended to qualify the charge-off practice the government claims was absolute. Second, the

word generally begs as many questions as it answers. How often would Friedmans be required to

charge-off on exactly the 120th day to meet that standard? Would it suffice if Friedmans almost

always charged-off accounts near their 120th day? How would a person in Stinns positionmuch

less the jurydivine these answers? Due process principles forbid the government from predicating

criminal liability on such shifting sands.

The lack of fair notice inherent in the governments theory is confirmed by several

undisputed facts established at trial. For starters, it was widely knownboth among Friedmans

personnel and by Friedmans outside auditor, Ernst & Youngthat a particular accounts charge-off

date varied widely beyond 120 days. That is because Friedmans never charged-off more than 10

1 Notably, the indictment omitted the qualifier generally when describing Friedmans charge-off policy. See Indictment 9 (According to its public filings, Friedmans charged off any credit account where no payment had been received for 120 days, or where Friedmans determined that the account was otherwise uncollectible.).

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times per year, in order to allow its staff to focus on sales rather than collections efforts during

crucial selling seasons. Accordingly, at least twice each year, accounts would not even be

considered ready for charge-off until they were at least approximately 150 days delinquent. Ernst &

Young was fully apprised of that fact, but it offered no objection to Friedmans reporting that it

generally charged off at 120 days. Moreover, Friedmans charged-off only at the end of a fiscal

month, which did not necessarily (and indeed, typically would not) coincide with the 120th day of an

accounts delinquency. Customers made purchases on a daily basis across Friedmans 700-plus

stores, and their payments were due on any number of days within a given month. As a result, an

account that became 120-days delinquent on, say, the 5th day of a fiscal month was not considered

for charge-off until month-end, at which point it would have been approximately 145 days

delinquent. This fact, too, was well-known to Ernst & Young but drew no objection. Thus, a

reasonable person in Stinns position would have understood Friedmans stated charge-off policy to

mean that Friedmans used the 120-day marker to make an account eligible to be charged-off, not

that it was likely (much less certain) to happen on that particular day.2

Friedmans charge-off policy also must be viewed in light of the other information

Friedmans waseven under the governments view of the caseaccurately reporting. If a

payment was received on an account after the close of a fiscal reporting period, Friedmans booked

that cash as having been received in the correct financial period. That is, there is no suggestion that

Friedmans misreported the actual dollars it received in a given quarter or fiscal year. Thus, while

Friedmans did not claim generally to report cash receipts in the period in which they were

2 The government repeatedly attempted to elide that pivotal distinction at trial, referring simply to Friedmans 120 day policy but omitting the essential qualifier generally. See, e.g., Tr. 915, 1301, 1314, 1386, 1395, 1410, 2073, 2178-79, 2336, 2337, 2853, 3390, 4127, 4129, 4130.

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actually received, it expressly acknowledged that it only generally charged off accounts at 120

days. A reasonable person familiar with Friedmans business would have appreciated that

distinction.

B. The Governments Theory That Friedmans Failed To Follow Strict Credit Application Policies Likewise Rested On An Intractably Ambiguous Premise

Friedmans announcedamong the various Risk Factors listed in its 10-K report filed with

the SEC for fiscal year 2002that it adhered to strict credit application guidelines in determining

whether our customers qualify for credit. Ex. 16 at 24. The government argued that Friedmans

policies were not, in fact, strict because they permitted managers and supervisors to grant more

credit than that initially authorized by a computerized scoring model that placed customers into one

of six credit tiers.

The term strict, however, is likewise incapable of a fixed meaning sufficient to satisfy the

requirements of due process. The word is inherently one of degreecredit practices that are strict

to one person may be ordinary or even lax to another. And that is particularly true for a retail

chain such as Friedmans, which marketed itself to low- and middle-income consumers and

explicitly based its business model on making a large portion of its sales on credit. A reasonable

person in Stinns position could not fairly predict that allowing limited deviations from a

computerized scoring systemwhile requiring approvals from increasingly more senior managers

according to the amount of credit extendedcould not be characterized as strict. Where the

meaning of a word is truly in the eye of the beholder, due process forbids the imposition of criminal

liability even if the government is later able to convince a jury of a particular interpretation.

In any event, the governments fixation on the word strict simply ignores the far more

comprehensive description of Friedmans credit policies. See United States v. Fields, 592 F.2d 638,

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649 (2d Cir. 1978) (alleged misstatement must significantly alter[] the total mix of information

made available to investors) (emphasis added) (quoting TSC Indus., Inc. v. Northway, Inc., 426

U.S. 438, 449 (1976)). Perhaps most notably, Friedmans financial statements also declared that

[c]redit sales in excess of the limits determined by the scoring model require approval from regional

credit supervisors. 2002 10K at F-6 (emphasis added). Those statements also explained the

companys philosophy that each store should operate as an independent business to the greatest

extent possible. To that end, [s]tore partners are responsible for the management of all store-level

operations, including sales, credit extension and collection, payroll and personnel matters. Ex. 16

at 4 (emphasis added). Similarly, Friedmans financial statements warned that the company may

experience initial uncertainty in our credit portfolio when entering new markets. Id. at 25.

Particularly when these statements are viewed in their proper contextwhich the law undoubtedly

requiresthe governments theory is legally defective.

At trial, the government made much of the fact that defense witness (and former Friedmans

employee) Harold Cook testified that managers had absolute discretion to give credit to any

customer up to that managers limit, arguing that such evidence proves that Friedmans did not

have strict credit guidelines. Tr. 4136. To the contrary, that testimony proves how utterly

malleable the term strict credit application guidelines was in the hands of the government. Cook

testified (as did others, without contradiction) that, while a computerized scoring method determined

a customers initial credit eligibility, each Friedmans manager had a strict credit limit determined in

accordance with his or her position. For example, regional managers could grant up to $3,000 of

credit, and so on up the lineindeed, that fact is expressly contemplated by the statement that

9

[c]redit sales in excess of the limits determined by the scoring model require approval from

regional credit supervisors. Ex. 16 at F-6.

Moreover, this practice was no secret from Friedmans auditors. It was undisputed that Ernst

& Young knew full well that Friedmans followed a decentralized credit model and vested managers

with a limited measure of discretion. Friedmans credit manual, which was available to virtually any

Friedmans employee, explicitly stated as much. Ex. 673 at 3. Yet Ernst & Young took no issue

with the description of Friedmans credit policy contained in the financial statements. In light of all

that, it is difficult to see howand surely fairly debatable whetherStinn would have been on

fair notice that the public descriptions of Friedmans credit granting policies were misleading.

II. The Jury Instruction On Conscious Avoidance Was Reversible Error The governments theory at trial was that Stinn had actual knowledge of accounting fraud at

Friedmans. That theory hung almost exclusively on the testimony of Victor Suglia, who claimed to

have had a series of one-on-one conversations with Stinn in which Stinn orchestrated (Tr. 4119)

the alleged wrongdoing. Most notably, Suglia claimed that:

Stinn understood the allowance for doubtful account[s] as well, if not better, than I did (Tr. 2100) and personally set the allowancefirst at 10% and later unilaterally announced an increase to 10.5%;

Stinn was very hands-on and was very involved in the credit process (Tr. 2100), rendering

his statements about the companys performance misleading; Stinn decided not to disclose the so-called x-files and was personally involved in choosing

which of those accounts to charge-off (Tr. 1337-38); and Stinn suggested (Tr. 1442) and then insisted upon using the Morgan Schiff reserve to

negate the earnings impact of tax-gross-up payments to Stinn and other executives (Tr. 2207).

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In short, the government claimed that Stinn personally directed the alleged scheme and that Suglia

(and his co-conspirator, John Mauro) merely carried out the defendants orders. Tr. 4156.

The fundamental weakness in the governments theory, however, was that it depended

critically on a witnessSugliawhose credibility could easily have been rejected by the jury.

Indeed, it was undisputed that Suglia and Mauro began cooperating only after being caught red-

handed in a fraud scheme entirely unconnected to the conduct charged in the indictment. What is

more, both Suglia and Mauro confessed at trial to engaging in accounting improprieties at

Friedmans without Stinns knowledge or direction: Suglia admitted that in 2000, he unilaterally

directed subordinates to manually re-age delinquent accounts but did not disclose that fact to Stinn

(Tr. 1761-62); similarly, Mauro admitted that he kept an improper cookie jar reserve account on

Friedmans books, which was unknown to Stinn and which Mauro used at his discretion to conceal

other accounting issues (Tr. 2658). None of that misconduct was part of the scheme that Stinn was

alleged to have orchestrated; rather, it was incontrovertible evidence that both Suglia and Mauro

had committed fraud at Friedmans while concealing it from Stinn.

Unable to dispute these facts, the government sought an alternative path to conviction that

did not rely so heavily on Suglias questionable credibility. The government asked, and the Court

agreed (over defense objection), to give the jury a conscious avoidance instruction. The Court

charged the jury that in determining whether the defendant acted knowingly, you can consider

whether the defendant deliberately closed his eyes to what would otherwise have been obvious to

him. Tr. 4411.

But the government offered no proof to support such a theory. From the first witness to the

last, the government sought to elicit testimony showing only that Stinn actually knew about the

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alleged accounting fraud at Friedmans. The government is free to put on evidence of both actual

knowledge and conscious avoidance, but it cannot merely argue in the alternative that the defendant

must have known about alleged wrongdoing. And under the compelling circumstances of this

casewhere the governments star witnesses have confessed to committing separate frauds

unknown to the defendantthis error cannot be harmless beyond a reasonable doubt. It is more than

fairly debatable whether the conscious avoidance instruction was erroneous and prejudicial to the

defense.

A. The Conscious Avoidance Instruction Was Error It is well-settled that a conscious avoidance instruction may only be given if (1) the

defendant asserts the lack of some specific aspect of knowledge required for conviction, and (2) the

appropriate factual predicate for the charge exists. United States v. Ferrarini, 219 F.3d 145, 154

(2d Cir. 2000) (citation omitted). The first element is not at issue here: The defense asserted that

the government had failed to prove that Stinn knew Friedmans statements to shareholders were

misleading.3 It is clear, however, that the government failed to meet the second element, and it was

therefore error to give the instruction.

A factual predicate for the instruction does not exist unless there is evidence that the

defendant deliberately avoided confirming the disputed fact. United States v. Svoboda, 347 F.3d

471, 480 (2d Cir. 2003) (citing United States v. Lara-Velazquez, 919 F.2d 946, 951-52 (5th Cir.

1990)). It is the affirmative decision to shield ones eyes from actual knowledge of wrongdoing that

distinguishes conscious avoidance from merely fail[ing] to learn it through negligence. United

States v. Rodriguez, 983 F.2d 455, 458 (2d Cir. 1993). The government did not attempt to establish

3 To be clear, that was not the only defense presented at trial.

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that Stinn deliberately avoided learning of fraudulent activity; to the contrary, the governments case

rested on the premise that Stinn himself orchestrated and directed the fraud. As detailed above,

the government claimed that Stinn set the allowance for doubtful accounts; that Stinn was very

hands-on with the companys credit operations and actually knew that the companys credit

portfolio and practices were inconsistent with statements to shareholders; that Stinn decided whether

to disclose the x-files accounts and which of them to charge-off; and that Stinn conceived the idea to

use the Morgan Schiff accrual to cover the tax gross-up payments. The government repeated this

refrain of actual knowledge throughout its closing arguments. E.g., Tr. 4127, 4128, 4132, 4136,

4137, 4138, 4139, 4143, 4144, 4145, 4147, 4149, 4151, 4156, 4164, 4166, 4167, 4168, 4169, 4170,

4172, 4183, 4185, 4187 (summation); Tr. 4354, 4364, 4365 (rebuttal). Conversely, the government

did not adduce evidence showing that Stinn deliberately avoided confirming such knowledge.

The reason for that is readily apparent: It would have been difficult for the government to

have credited Suglias testimony that he personally discussed every key fact of the scheme with

Stinn while simultaneously introducing evidence showing that Stinn avoided acquiring such

knowledge. That is, although actual-knowledge and conscious-avoidance theories are not always

inconsistent, here the governments theory that Stinn orchestrated the fraud would have been

seriously undermined by evidence that he turned a blind eye to the crucial facts.

It is no answer, as the Court suggested when stating its intention to give the conscious

avoidance instruction (Tr. 3903), that Suglia testified that Stinn was not always privy to the

particular manipulations Suglia employed to arrive at the allowance for doubtful accounts figure that

Stinn allegedly set. A conscious avoidance instruction is not appropriate simply because the

defendant happened not to learn one or more particular features of the alleged scheme; what matters

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is whether the defendant chose not to learn the key fact. Rodriguez, 983 F.2d at 458 (double

emphasis added). Were it otherwise, a conspiracy count would virtually always support a conscious

avoidance charge, because at least some detail of a scheme typically is known to one conspirator but

not to another. Here, the government claimed that Stinn knew the key fact in dispute: whether the

financial statements were misleading. Whether he also knew a subordinate facte.g., precisely how

Suglia said he generated the allowance for doubtful accountsis beside the point.

Having committed to Suglias testimony that he personally discussed each element of the

fraud with Stinn, the government did not (indeed, credibly could not) attempt to introduce evidence

showing that Stinn deliberately decided to avoid acquiring such knowledge. It is therefore at least

fairly debatable whether giving the conscious avoidance instruction was error.

B. The Error Was Not Harmless Beyond A Reasonable Doubt Because the erroneous instruction compromised Stinns constitutional right to require the

government to carry its burden, his convictions must be overturned unless the government can

establish that the error was harmless beyond a reasonable doubt. United States v. Barnhart, 979

F.2d 647, 652 (8th Cir. 1992) (quoting United States v. Hasting, 461 U.S. 499, 510-11 (1983)); see

ibid. (The improper use of the willful blindness instruction does affect constitutional rights because

it creates a risk that the defendant will be convicted because he acted negligently or recklessly.);

see also Ferrarini, 219 F.3d at 154 (an erroneously given conscious avoidance instruction

constitutes harmless error if the jury was charged on actual knowledge and there was overwhelming

evidence to support a finding that the defendant instead possessed actual knowledge of the fact at

issue.) (quoting United States v. Adeniji, 31 F.3d 58, 64 (2d Cir. 1994)) (first emphasis added).

The government cannot meet that standard.

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The governments theory that Stinn possessed actual knowledge of fraud rested almost

exclusively on the testimony of Victor Suglia. Suglias testimony dominated the trial, consuming

nearly 4 days on direct examination, and 4 more on cross examination, re-direct, and re-cross. On

virtually every aspect of the alleged fraud, the government turned to Suglia to supply the necessary

link to Stinn. As explained above, Suglia testified that he and Stinn engaged in a series of one-on-

one conversations in which they openly discussed the wrongdoing. See also, e.g., Tr. 1008-09

(Suglia testimony that Stinn personally set the final earnings per share number each quarter and

directed Suglia to back into that number by engaging in accounting manipulations); Tr. 1313 (Suglia

testimony that a memo he prepared containing his recommendations for how to treat the x-files was

prepared at Stinns direction only to deflect criticism in the event the x[-]file problem . . . exploded

in our face.).

As at least one court has recognized, however, it is difficult to say that an erroneous

conscious avoidance instruction is harmless beyond a reasonable doubt where the evidence of [the

defendants] knowledge came down to a credibility determination. Barnhart, 979 F.2d at 653

(holding that erroneous conscious avoidance instruction not harmless error). And it was clear that

Suglia had overwhelming incentives to lie about Stinns involvement.

For starters, it was undisputed that Suglia and Mauro had committed a separate fraud at

Friedmans entirely without Stinns knowledge or involvement. Both men admitted that they had

defrauded Capitol Factors of millions of dollars by falsifying Friedmans invoices to help their

friend (and benefactor) Bob Morris. Accordingly, the notion that Stinns purported co-conspirators

might have concealed from him the wrongdoing alleged in this case was hardly implausible.

15

What is more, Suglia confessed that in 2000well before the scheme alleged in the

indictment supposedly commencedhe had directed subordinates to manually re-age accounts

receivable to help Friedmans hit its earnings targets. Suglia admitted that he did so on his own, and

without Stinns knowledge or direction. Tr. 1761-62. Indeed, Bill Milligan testified that Suglia

explicitly stated that some things are done without [Stinns] knowledge and we clean-up after

ourselves. Tr. 2904. Similarly, Mauro admitted that he maintained a secret cookie jar reserve to

cover unexpected accounting issues, and that he did so without Stinns knowledge. Tr. 2658. And

Mauro admitted that, like Suglia, he had told other Friedmans employees to conceal information

from Stinn. See Ex. 785 (Do not give this [charge-off] information to Brad, if you know what I

mean.); Tr. 2662 (Mauro acknowledging same).

It was also undisputed that Suglia began cooperating with the government only after being

caught red-handed in the Capitol Factors fraud. Having no meaningful defense to those charges

and no remotely plausible means to suggest that Stinn was involved in itSuglia had little choice

but to look for ways to curry favor with the government. As the companys CFO, Suglia had just

one bigger fish he could offer: Brad Stinn. The defense thoroughly impeached Suglias credibility

on this score at trial. Where the governments star witnesses offer testimony purporting to establish

the defendants actual knowledge only after being caught in an unrelated fraud and have admitted

engaging in accounting manipulations outside the alleged conspiracy, it is fair to say their credibility

is squarely at issue and their claims that the defendant had actual knowledge are hardly

overwhelming.

The government no doubt will claimas it did in its rebuttal argument (Tr. 4351)that its

case against Stinn was sufficient even without Suglias testimony, but that is neither true nor

16

pertinent for present purposes. It is not true because the evidence against Stinn, once Suglia is

entirely discounted, was quite modest, and hardly the overwhelming proof required by the

conscious avoidance case law. But the point is also irrelevant: So long as there was a substantial

risk that the jury used the conscious avoidance instruction to convict, the government cannot carry

its burden to prove harmlessness. Once Suglias highly impeached testimony is set to one side, the

risk that the jury relied on conscious avoidance was extraordinarily high.

In sum, the governments heavy reliance on Suglias testimonyand Suglias documented

pattern of committing fraud at Friedmans while concealing the same from Stinnmakes this a

particularly poor case in which to assume that the jury did not rely on the erroneous conscious

avoidance instruction. It is surely fairly debatable whether the government can establish that the

error was harmless beyond a reasonable doubt.

III. The Courts Rulings During Jury Deliberations Were Erroneous And Prejudicial

The Court made three independentyet compoundederrors during jury deliberations.

Each of those errors presents a substantial issue for appeal.

While the jury reported that it was making good progress after the first full day of

deliberations, Tr. 4536 (Ct. Ex. 7), relations quickly deteriorated by the second day when certain

members of the jury sent a note claiming that one juror [wa]s unwilling to deliberate. Tr. 4568

(Ct. Ex. 10). The Court then reread its instructions on the duty to deliberate, telling the jury: [d]o

not hesitate to change your opinion if you are convinced that another opinion is correct (Tr. 4582),

but the conflict among jurors continued unabated. See Tr. 4583 (Ct. Ex. 11) (jury note on third day

alleging that one juror refuses to consider evidence or other jurors opinions). At least two

17

different jurorsin separate incidentsleft the jury room and attempted to speak directly with the

Court. Tr. 4611.

On the fifth day of deliberations, the jury sent a note stating that it wished to submit its

unanimous verdict on two counts. Tr. 4611 (Ct. Ex. 14). The jury foreperson read a guilty verdict

on Counts Two and Three. Tr. 4614 (Ct. Ex. 15). The Court then polled the jury, but Juror No. 10

stated in open court that guilty was not her verdict. Tr. 4616. The Court returned the jury to the

deliberations room with the instruction that it should continue its deliberations. Ibid. The defense

moved for a mistrial, which the Court denied. Tr. 4618.

Shortly thereafter, the jury sent a note claiming that it c[ould] not continue deliberations

since one juror agreed to the verdicts rendered and then recanted when in the courtroom, and it

accused that juror (Juror No. 10) of having questionable integrity. Tr. 4621 (Ct. Ex. 16). The

defense renewed its motion for a mistrial. Tr. 4621. The Court denied that motion, deciding instead

to deliver an Allen chargedespite the fact that Juror No. 10s identity as the holdout vote for

acquittal had just been revealed in open court.

After the Courts Allen charge, jurors focused their attention even more sharply on Juror No.

10, telling the Courtfalsely, as it turned outthat she had spoken to an attorney last night to

determine which of the charges were the most serious. Tr. 4644 (Ct. Ex. 17). In fact, Juror No. 10

explained that she had asked her sister, a Portuguese literature professor in Brazil (not an attorney),

about the difference between the definitions of fraud and conspiracy, that she had not discussed

the details of the case, and that she had not shared her sisters response with the other jurors.

Tr. 4653-56. Juror No. 10 also provided insight into how badly the deliberative process had broken

down, explaining that she had told the jury, listen, I have a doubt, and I spoke. I didnt mention the

18

trial to my sister, which caused the other jurors to start[] screaming with [sic] me, [and] said I

want you out of the jury. Whatever I was writing to the judge, explain I cant talk [sic], nobody let

me talk. Tr. 4657.

Although the jurys note about Juror No. 10 was plainly misleading, and Juror No. 10 was

clearly the sole holdout for acquittal, the Court dismissed her from the jury. It did so without first

making findings that her conduct had been prejudicial, or explaining how a curative instruction

would have been futile.

As we explain below, the Courts removal of Juror No. 10 violated Stinns rights to due

process and to a verdict by a unanimous jury. The Court further erred when it denied the defense

request for a mistrial after dismissing Juror No. 10 and instead substituted an alternate juror who had

witnessed the open-court proceedings relating to Juror No. 10. Thus, the alternate heard the Court

read the forepersons notes characterizing the nature of the deliberations and describing one jurors

alleged conflicts with the remaining jurors. The alternate heard that the jury had purportedly

reached a unanimous verdict of guilty on two counts, but witnessed Juror No. 10 explain that the

verdicts were not unanimous. And the alternate then observed Juror No. 10s dismissal from the

jury. The Courts decision to introduce an alternate when all eleven other jurors had already reached

a conclusion of guilt after four days of deliberations and had made known their conclusion in open

court was coercive and was tantamount to directing a guilty verdict.

A. The Allen Charge Was Unduly Coercive

The Courts delivery of an Allen charge following the reading of the partial verdict and the

polling of the jury was unduly coercive and denied Stinn the right to a fair trial. Once the Court

learned that Juror No. 10 was a holdout for acquittal, it was obliged to take steps to minimize the

19

likelihood of either coercing a verdict or excluding her vote for acquittal. As numerous courts have

recognized, where the court knows the identity and inclination of the lone holdout juror, an Allen

chargeeven a modified onecan be unduly coercive. See United States v. Hynes, 424 F.2d 754,

757 (2d Cir. 1970) (citing foreknowledge of the numerical split [in the jury] as an aggravating

circumstance heightening the danger of coercion); United States v. Williams, 547 F.3d 1187, 1207

(9th Cir. 2008) (ordering new trial where court gave modified Allen charge after holdout juror

revealed her identity to the court); Jiminez v. Myers, 40 F.3d 976, 981 (9th Cir. 1993) (A single

vote stood between defendant and conviction. In such a case the most extreme care and caution

were necessary in order that the legal rights of the defendant should be preserved.) (quoting Burton

v. United States, 196 U.S. 283, 307 (1905)).

In this case, an individualized determination based on all of the circumstances

demonstrates that the Allen charge here was impermissibly coercive. United States v. Crispo, 306

F.3d 71, 77 (2d Cir. 2002). The Courts charge followed a previous instruction by the Court to

continue deliberations, including a reminder that jurors should not hesitate to change their

opinions if they became convinced another opinion was correct. It is well-established that the

chances of coercion may increase with each successive appeal by the court to the jurors to try to

reach a verdict. United States v. Robinson, 560 F.2d 507, 517 (2d Cir. 1977) (en banc). The charge

also followed several days of obvious conflict among the jurors regarding the essential question of

guilt and complaints by the majority directed against a single juror, including an accusation aimed

specifically at Juror No. 10s integrity. The charge itself came on the heels of Juror No. 10s

disavowal of a purportedly unanimous verdict in open court. Such action strongly suggests that she

had already experienced overwhelming pressure to vote with the majority against her personal

20

beliefs, or that the majority had falsely claimed unanimity in its note. In either event, relations

among the jurors had clearly reached a precarious stage, and further instruction by the Court

involved a significant risk that the jurors would perceive an instruction to continue deliberations to

be coercive.

A recent Ninth Circuit decision is instructive. In Williams, the trial court received a note

from one juror revealing that she was the holdout vote for acquittal. The court then gave a

supplemental instruction that the Ninth Circuit analyzed under the Allen charge framework. The

Ninth Circuit held that the courts delivery of an Allen-type charge had been improperly coercive,

recognizing that reversal is necessary if the holdout jurors could interpret the charge as directed

specifically at themthat is, if the judge knew which jurors were the holdouts and each holdout

juror knew that the judge knew he was a holdout. 547 F.3d at 1205 (quoting United States v.

Ajiboye, 961 F.2d 892, 894 (9th Cir. 1992)) (citing in turn United States v. Sae-Chua, 725 F.2d 530,

532 (9th Cir. 1984)).

Such was the case here. Following jury polling, the Court and everyone else knew that Juror

No. 10 was the holdout vote for acquittal, and Juror No. 10 knew that they knew. This situation is

therefore unlike those cases where the jury simply made known its division to the court, but did not

identify a particular dissenting juror. See, e.g., United States v. Meyers, 410 F.2d 693, 697 (2d Cir.

1969). It is also unlike cases where the holdouts identity was revealed voluntarily and without

solicitation, and therefore the potential for coercion was greatly reduced. See, e.g., Robinson, 560

F.2d at 516-17 (holdout juror sought advice in note to court); Crispo, 306 F.3d at 76 (holdouts

21

identity was accidentally revealed in open court when she corrected a mistaken reading of her

handwriting in jury note).4

Finally, the jurys actions leading up to the Allen charge in this case suggested that

deliberations were already past a useful end. Crispo, 306 F.3d at 77 (concluding, based on

continued deliberations after the charge, that the charge was not so coercive as to end all reasoned

discussion); see also Robinson, 560 F.2d at 517-18 (continued deliberations by jury for some time

after separate Allen charges were strong indications that the effect of the charge was minimal). To

the contrary, all reasonable discussion here had already ceased. Soon after the Allen charge, the jury

sent out a note falsely accusing Juror No. 10 of speaking with an attorney, and proclaiming that

[t]he rest of the jury feels any further deliberations are futile. Tr. 4644 (Ct. Ex. 17). Under those

circumstances, the charge had the improper effect of reinforcing the majoritys own views of guilt.

For that reason, even though Juror No. 10 was eventually dismissed from the jury that rendered the

verdict, the Courts error in giving the charge was not harmless because subsequent deliberations

were prejudicially compromised. Cf. Perez v. Marshall, 119 F.3d 1422, 1429 (9th Cir. 1997)

(Nelson, J., dissenting) (although trial courts removal of holdout juror could not coerce that juror

into joining the majority, it did send a strong message to the remaining 11 jurors that the trial court

endorsed their proclivity for conviction and implicitly encouraged them to hold their position)

(quoting Ajiboye, 961 F.2d at 894).5

4 Indeed, the trial court in Robinson had kept the holdout jurors note sealed, and the Second Circuit observed that disclosure of the lone hold-out jurors name to counsel might, if this became known to her, embarrass her and have the contrary effect of leading her to yield rather than adhere to her views. 560 F.2d at 517. 5 In addition, the Court erred by denying the defenses request for a mistrial immediately after jury polling revealed that the verdict was not unanimous. The Court should not have returned the jury to deliberations in light of its obvious inability to deliberate in accordance with the Courts previous instructions. See, e.g., United States v. Love, 597 F.2d 81, 86 (6th Cir. 1979) (manifest necessity to declare mistrial where one juror dissented from verdict during polling); cf. Grossheim v. Freightliner Corp., 974 F.2d 745, 753 (6th Cir. 1992) (no abuse of discretion in granting mistrial in civil

22

The Allen charge here was unduly coercive and ultimately resulted in the swift return of a

guilty verdict after dismissal of Juror No. 10 and substitution of the alternate juror. The charge

violated Stinns right to a fair trial and presents a substantial issue for appeal.

B. Dismissal Of The Holdout Juror Was Improper

The Court also erred by dismissing Juror No. 10 after learning that she had spoken with her

sister. Although a courts decision to remove a juror for just cause is typically discretionary, the

Second Circuit has held that the decision must be meticulously scrutinized when the court is

confronted with a known dissenter for acquittal. United States v. Hernandez, 862 F.2d 17, 23 (2d

Cir. 1988); see also United States v. Samet, 207 F. Supp. 2d 269, 281 (S.D.N.Y. 2002) (in this

Circuit . . . a jurors status as a holdout is a red flag that will result in the closest scrutiny of the

District Courts decision to discharge the juror). Once the Court learned that Juror No. 10 was the

holdout vote for acquittal, it could dismiss her only after making specific findingsgrounded in the

facts and circumstances on the recordthat her misconduct had been prejudicial and that she could

not follow the Courts instructions going forward. The Courts failure to do so was improper and

prejudicial.

It is axiomatic that a district court may under no circumstances remove a juror in an effort to

break a deadlock. United States v. Thomas, 116 F.3d 606, 624 (2d Cir. 1997); see Hernandez, 862

F.2d at 23 (That a juror may not be removed because he or she disagrees with the other jurors as to

the merits of a case requires no citation.). Although courts generally have discretion to dismiss

jurors for misconduct, that discretion must be exercised with the utmost caution after deliberations

have begun and where the juror to be dismissed is the lone holdout for acquittal. In Thomas, the

trial after one juror revoked her verdict).

23

Second Circuit recognized that a holdout jurors refusal or unwillingness to follow the law could

serve as a proper basis for removal. 116 F.3d at 617. It cautioned, however, that courts must

articulate a sufficient evidentiary basis for this finding. Id. at 618. Thomas reaffirmed the courts

inherent authority to conduct inquiries in response to reports of improper juror conduct and to

determine whether a juror is unwilling to carry out his duties faithfully and impartially. Id. at 617

(emphasis added); see also id. at 621 (the presiding judge can make appropriate findings and

establish whether a juror is biased or otherwise unable to serve) (emphasis added). Thus, the

courts focus and its findings must be forward-looking. E.g., United States v. Baker, 262 F.3d 124,

132 (2d Cir. 2004) (affirming dismissal of holdout juror who herself told the judge she had made up

her mind in advance of deliberations and thereafter refused to deliberate).

Here, the Court made no findings that Juror No. 10 was biased, unwilling to carry out

[her] duties faithfully and impartially, or otherwise unable to serve going forward in the

deliberations. It simply dismissed her after learning that she had asked her sister about the

difference between the definitions of fraud and conspiracyeven though they had not discussed

the details of the case, and even though she had not shared any information with other jurors. The

Court failed to articulate how Juror No. 10s actions had caused any prejudice, and it also failed to

explain why her participation in future proceedings would be unproductive.6 As in Thomas, Juror

No. 10 said nothing to the court to indicate that [s]he was unwilling to follow the courts

instructions[.] 116 F.3d at 623.

6 The Court offered only this statement: Based on my observations, including the demeanor of the juror and the content of her answers, Im satisfied that the juror cannot be rehabilitated by simply telling her once again not to speak to anyone outside the jury room. Tr. 4667.

24

The record simply does not support a finding of good cause necessitating dismissal. Even

where, as here, the courts stated reason for dismissing a holdout juror is not directly tied to that

jurors view of the evidence, [t]he presence of a holdout lends heightened significance to the

district courts duty of inquiry. United States v. Ginyard, 444 F.3d 648, 654 (D.C. Cir. 2006)

(district court abused discretion in dismissing holdout juror who claimed he would lose job

opportunity if he continued participating in deliberations). The court cannot reasonably fail to

explore other options. Id. at 655.

Here, the Court failed to explore other, more reasonable options. It should not have

dismissed Juror No. 10 without first instructing her to follow the legal definitions given by the Court

and seeking to determine whether she could do so. Juror No. 10s violation of the Courts

instructions could have been cured by an instruction to disregard her sisters proposed definitions

and to follow the Courts instructions. See, e.g., Sher v. Stoughton, 666 F.2d 791, 794-95 (2d Cir.

1981) (where jurors had received anonymous calls telling them to convict the defendant and violated

the Courts direction by discussing the calls among themselves, the violation was cured by voir dire

and curative instructions); United States v. Lara-Ramirez, 519 F.3d 76, 87 (1st Cir. 2008)

(Although the issue does not arise often, we have held that curative instructions are an appropriate

remedy when jurors are exposed, during their deliberations, to extraneous materials.) (citation

omitted); United States v. Bradshaw, 281 F.3d 278, 289 (1st Cir. 2002) (If the court finds both a

taint-producing event and a significant potential for prejudice, the court must then consider the

extent to which prophylactic measures (such as the discharge of particular jurors or the

pronouncement of curative instructions) will suffice to alleviate that prejudice.); State v. Squiers,

896 A.2d 80, 88 (Vt. 2006) (juror used Westlaw to locate statutes and sentences at issue, which was

25

cured by judge asking him if he could disregard what he had heard and follow the Courts

instructions and by instructing the other jurors to disregard anything he told them). Cf. McNeill v.

Polk, 476 F.3d 206, 227 (4th Cir. 2007) (no prejudice where juror consulted dictionary to determine

definition of mitigate, and shared that definition with other jurors, where the definition was not

inconsistent with the courts definition); District Council 37 v. New York City Dept. of Parks and

Recreation, No. 93 Civ. 2580 (AGS), 1995 WL 739512, at *11 (S.D.N.Y. Dec. 14, 1995) (no

evidence of prejudice based on fact that juror stated after the verdict that he had consulted a

dictionary and an attorney about the meaning of the word pretextual, which appeared on the

verdict form). The Courts dismissal of Juror No. 10 violated Stinns rights to due process and to a

unanimous jury, and presents a substantial issue for appeal.

C. Substitution Of The Alternate Juror Was Improper

The Court erred again when it seated the alternate juror to replace Juror No. 10. The

alternate juror was placed in an incurably coercive situation. She had witnessed the open-court

proceedings recounting discord among the jurors and had witnessed Juror No. 10s dissent from the

partial verdict. She then saw the Court remove Juror No. 10. More troubling still, the alternate was

not privy to the final jury note accusing Juror No. 10 of speaking with an attorney, and therefore

reasonably could have inferred that Juror No. 10 was dismissed for refusing to vote guilty with the

other jurors, despite the Courts instruction that she not . . . speculate (Tr. 4669-70) as to why

Juror No. 10 had been dismissed. The risk was simply too great that the verdict would be coerced.

Cf. United States v. Lamb, 529 F.2d 1153, 1156 (9th Cir. 1975) (en banc) (The inherent coercive

effect upon an alternate juror who joins a jury that has, as in this case, already agreed that the

accused is guilty is substantial.); United States v. Razmilovic, 507 F.3d 130, 137 (2d Cir. 2007)

26

(manifest necessity to declare mistrial where there exists a significant risk that a verdict may result

from pressures inherent in the situation rather than the considered judgment of all the jurors)

(quoting United States v. Washington, 434 U.S. 497, 509 (1978)); Perez, 119 F.3d at 1429 (Nelson,

J., dissenting) (A replacement juror, no matter how novel or persuasive her argument for . . .

acquittal may have been, would have been hard-pressed to overcome the trial courts implied

admonition [through an earlier Allen charge] to the original jurors to hold their ground and

convict.). As the Fifth Circuit has recognized, [a]n alternate juror replacing a regular juror after

the jury has commenced its deliberations may be unable to participate equally with the other jurors.

United States v. Quiroz-Cortez, 960 F.2d 418, 420 (5th Cir. 1992). That is because [t]here is a

danger that the other jurors will have already formulated positions or viewpoints or opinions in the

absence of the alternate juror and then pressure the newcomer into passively ratifying this

predetermined verdict, thus denying the defendant the right to consideration of the case by twelve

jurors. Ibid.

That is precisely what happened here. In this case, there can be no doubt that the other jurors

had already formulated positions about the case prior to substitution of the alternate juror, because

they had previously attempted to return a guilty verdict. And the Court had at least implicitly

encouraged that view through its earlier Allen charge and by its dismissal of Juror No. 10. The

danger of coercion under these circumstances was overwhelming.

It should come as no surprise, then, that the re-constituted jury returned a verdict on all

counts less than three hours later (Tr. 4685)notwithstanding the fact that the original jury had

engaged in almost five days of deliberations after a six-week trial. See, e.g., Lamb, 529 F.2d at 1156

n.7 (recognizing the obvious coercive effect suggested by a short final deliberative period).

27

Indeed, early in the initial deliberations, when the jury stated that it was at a standstill and sought

guidance from the Court, the Court made a point of instructing the jury that this has been a long

trial and youve been deliberating less than two days. Tr. 4582. The Courts statement provides

further support for the notion that the three-hour deliberation period after substitution of the alternate

juror was simply not reasonable. The Courts substitution of the alternate juror after dismissing

Juror No. 10 was erroneous and presents a substantial issue for appeal.

***

Each of the questions outlined above is fairly debatable and very well could be decided

the other way under Second Circuit case law and thus presents a substantial question within the

meaning of 18 U.S.C. 3143(b)(1). Each of these questions, if decided in Stinns favor, would

likely result in a new trial order. Accordingly, Stinn should be released on conditions pending

appeal.

CONCLUSION

For the reasons stated above, defendant Bradley Stinn respectfully requests that the Court

grant his motion for release on conditions pending appeal.

Dated: January 5, 2009 Respectfully submitted,

___________/s/__________________ Lawrence S. Robbins (LR-8917) ROBBINS, RUSSELL, ENGLERT, ORSECK, UNTEREINER & SAUBER LLP

1801 K St., NW, Suite 411 Washington, D.C. 20006 Telephone: (202) 775-4500 Facsimile: (202) 775-4510 lrobbins@robbinsrussell.com Attorney for defendant Bradley J. Stinn

CERTIFICATE OF SERVICE

I, Jennifer S. Windom, declare under penalty of perjury that:

DEFENDANT BRADLEY J. STINNS MOTION FOR RELEASE PENDING APPEAL

was electronically filed with the Clerk of the Court using the CM/ECF system, which

automatically serves notification of such filing to the persons listed below:

Kevin D. Solonsky Ilene Weininger Jaroslaw Securities and Exchange Commission United States Attorneys Office 100 F Street, NE Eastern District of New York Washington , DC 20549 271 Cadman Plaza East 202-551-5014 Brooklyn , NY 11201-1820 Fax: 202-772-9263 (718) 254-6236 Email: solonskykd@sec.gov Fax: 718-254-6076 Email: ilene.jaroslaw@usdoj.gov James G McGovern Scott B. Klugman United States Attorneys Office United States Attorneys Office Eastern District of New York Eastern District of New York 271 Cadman Plaza East 271 Cadman Plaza East Brooklyn , NY 11201-1820 Brooklyn , NY 11201-1820 (718) 254-7553 718-254-6461 Fax: 718-254-6481 Fax: 718-254-6327 Email: james.g.mcgovern@usdoj.gov Email: scott.b.klugman@usdoj.gov Laura D. Mantell David W. Shapiro United States Attorneys Office Boies Schiller & Flexner LLP Eastern District of New York 1999 Harrison Street 271 Cadman Plaza East Suite 900 Brooklyn , NY 11201-1820 Oakland , CA 94612 718-254-6253 510-874-1000 Fax: 718-254-6081 Fax: 510-874-1460 Email: laura.mantell@usdoj.gov Email: dshapiro@bsfllp.com Mikal J. Condon Magda Maria Jimenez Train Boies Schiller & Flexner LLP Boies Schiller & Flexner LLP 1999 Harrison Street 575 Lexington Avenue Suite 900 New York , NY 10022 Oakland , CA 94612 (212) 446-2300 510-874-1000 Fax: 510-874-1460

Email: mcondon@bsfllp.com John F. Lauro Lauro Law Firm 101 E. Kennedy Blvd., Suite 3100 Tampa , FL 33602 813-222-8990 Fax: 813-222-8991 Email: jlauro@laurolawfirm.com Dated: January 5, 2009 ROBBINS, RUSSELL, ENGLERT, ORSECK, UNTEREINER & SAUBER LLP /s/_______________________ Jennifer S. Windom, Attorney 1801 K St., NW, Suite 411 Washington, D.C. 20006 Telephone: (202) 775-4500 Facsimile: (202) 775-4510